Blockchain in the city

1 October 2018
| Author: Jeremy Swinfen-Green

Blockchain technology has the potential to transform the smart city agenda.

I was lucky enough to be invited to a fascinating SmartCitiesWorld event on blockchain recently. The meeting, which took place in City Hall, and which was sponsored by blockchain company Pillar, kicked off with the view from the Mayor’s office, as expressed by Dr Stephen Lorimer the Mayor’s Smart London Strategy and Delivery Officer.

A complex problem

Stephen painted a picture of a complex organisation - 32 boroughs and many London-wide service providers such as ambulance, police and fire – that could be brought together through blockchain. For instance, transport, public, shared and private, can be better managed through data protected and shared through blockchain.

There are of course issues that need addressing. The first is providing a good user experience, an easy interface for blockchain powered services used by ordinary citizens. Then we need to manage the data that underpins blockchain properly: we need to find the right balance between data owners (you and me) and data exploiters (Google et al).

We also need to consider how we can collect data and use it usefully; Dr Lorimer gave the example of lampposts equipped with sensors being used to collect data about air quality. Processing that data involves the use of algorithms and those algorithms need to be developed effectively and transparently, so that people can understand what is happening to data, especially when it is their own data.

Most of all though at this stage we need to understand the potential that blockchain represents: how this technology will affect city finances and city services.

Clarity still needed

And it is uncertain what blockchain will mean for the smart city. Sarah Wray, editor of SmartCitiesWorld, unveiled thought provoking research into blockchain perceptions globally. Most people (80%) say they understand blockchain well or fairly well. But then they go on to say that the number 1 obstacle to implementing blockchain in cities is “Concerns about understanding the technology”. And 25% of respondents to the survey admitted they had no idea how blockchain could be used to address challenges.

But some uses for blockchain can be imagined. The governance of citizens was the most popular choice (63%) followed by e-voting (52%). Nearly half of the respondents (44%) saw opportunities in transport, while 38% felt that both energy and health would benefit and 32% felt that public safety would benefit.

At the moment though the details of these benefits, with the possible exception of e-voting (which is being trialled in Moscow) and the provision of documents such as visas (which is being trialled in Dubai) are hazy. It’s for that reason that only 15% indicated that they knew of active plans to use blockchain in their home city.

Faster, Better, Cheaper

Clarity is on the way though. Pillar founder David Siegel gave an inspiring talk about how blockchain-based “tokens” will be used in a number of business models. Blockchain, he said, can deliver transactions “faster, better cheaper”, just as computers delivered data processing and the Web delivered content sharing.

Transactions need money or tokens to work. Unlike money, tokens are units of value that have a specific purpose. They are effectively an IOU, a contract that represents rights and obligations. Some have the potential to be used multiple times; other are once-only use. Some can be transferred between people, some can only be used by a single individual.

Tokens can take physical form, such as Five Pound Notes. But tokens don’t need to be physical. Increasingly we see “digital” tokens, and this is where blockchain gets interesting, and problematic. Problematic mainly because laws around the physical ownership of tokens are very grey at the moment: so if I lose a token because you steal it then at the moment I have little redress.

But the law aside, digital tokens are coming into their own. Crypto- currencies like Bitcoin are of course well known. These are tokens which are limited in number (it’s hard work mining them) so their value tends to be very volatile depending on how many are available on the open market and whether there is a demand for them.

Smart cities and blockchain

So just how will cities like London benefit? The central benefit seems to be the enabling of trusting collaboration. This in turn can be used to break down silos in organisations or to get rid of centralised control points.

Take transport. London may have a well-integrated transport system in TFL. But there are still taxis, minicabs, hire-bikes, private bikes, ambulances, fire tenders, motor bikes, police cars, shared cars, private cars and pedestrians on the streets. An ideal city would coordinate all these methods of transport alongside the already well coordinated (we hope) TFL to provide an even better, less polluting and less congested transport system. Blockchain can underpin this.

Coordination isn’t the only benefit. Blockchain can also destroy monopolies by enabling people to collaborate in a trusted environment. Uber is busy monopolising the minicab and taxi market. Blockchain, by allowing trusted collaboration, would allow smaller trader to band together to fight back and regain market share.

But it’s sill very vague, very hazy. It sounds fine in theory but who is going to invest? There is a need for education, for language, non-technical language, to be used that will explain the potential to the people who will take investment decisions. There is a need for common data standards. For brave people to come together and set up communities to take the first step.

It’s happening. Slowly. The popcorn, as David Siegel says, pops one kernel at a time. But it’s happening. We are at the “early adopter” stage with as yet too few real life applications. A few more and the opportunities for blockchain will grow exponentially. City governance, along with energy and transport will be transformed.

The Pillar Project is a blockchain project focused on data protection rights. The project is currently building an open-source wallet to store, transact, and track cryptocurrencies and tokens. The Pillar Wallet will evolve into a decentralised, personal data-management platform. Learn more.